Revolut CFO resigns as company faces questions over sanctions screening

Follow the author of this article

Follow the topics within this article

The chief financial officer of Revolut, one of Britain’s best-known financial technology companies, resigned in January as the company was grappling with questions over its compliance systems, it emerged on Thursday.

Peter O’Higgins, who joined the ­digital bank in 2016 after 12 years at JP Morgan, quit the company at the start of the year, Revolut confirmed.

The start-up, however, insisted last night that Mr O’Higgins’ resignation was unconnected with concerns raised over compliance.

Details of his departure emerged one day after The Telegraph reported that Revolut’s board had launched an internal investigation last year into a “failing” in the bank’s sanction screening system.

A whistleblower contacted the bank’s board last year to inform them that an automated system to block transactions flagged for further checks had been turned off for months.

Documents seen by The Telegraph show that thousands of transactions flowed through the digital bank’s systems between July and September last year before they were checked for sanctions compliance after a decision to disable the blocking mechanism.

Mr O’Higgins’ departure is the latest blow for Revolut, which since its launch in 2015 has grown into the UK’s largest app-only challenger bank.

His lengthy experience in the financial sector has been valuable for the start-up which has attracted 3m customers.

Frustrations over 8,000 “false positive” flags, where legitimate transactions had been blocked, led the bank to disable its blocking system and switch to a screening process which allowed transactions to be made and reviewed later.

Revolut’s head of legal Tom Hambrett drafted a letter to the Financial Conduct Authority (FCA) in September to inform the watchdog of the three-month “failing” in its screening system, however a Revolut spokesman said on Thursday that the letter was never sent to the FCA.

"The investigation concluded that the original decision to turn off the transaction-halting mechanism was erroneous and implied a remediable systems and controls failing,” Mr Hambrett wrote.

In the draft letter, Revolut denied that it had broken any laws during the incident.

"To the best of Revolut's knowledge there has been no breach of law with respect to sanctions requirements," the company wrote.

Financial compliance experts interviewed by The Telegraph this week said that the switch to a weaker screening system was a serious issue for the growing financial technology business.

Revolut chief executive Nikolay Storonsky said on Thursday that the change in compliance system was “a systems enhancement project that we were rolling out in parallel with our existing systems and controls. The more technologically advanced sanctions screening system was just one part of the overall enhancement project.”

He also denied that any sanctioned transactions had taken place through Revolut. “At no point during this time do we believe that we failed to meet our legal or regulatory sanctions requirements,” he said.

Correction

An earlier version of this report wrongly suggested that Revolut had been accused of violating banking rules by switching off part of its anti-money laundering systems. Revolut has since confirmed that the transaction blocking mechanism related only to sanctions checking. We are happy to set the record straight